Study: Minimum Wage Hike Will Add $21.6 Million To Government Salaries

WASHINGTON, D.C. – A new study released today by the Employment Policies Institute, a conservative group that opposes a plan to raise the minimum wage, estimates that a $1 minimum wage will cost New Jersey state and local governments $21.6 million in additional wage costs for public employees earning at or near the minimum wage. The majority of the burden would fall on local governments, who employ 76 percent of the affected public employees.

The cost to state and local governments would annually increase, since the minimum wage ballot measure also alters the constitution to set future wage hikes to keep pace with inflation.

Michael Saltsman, research director at the Employment Policies Institute, said: “A minimum wage hike would hit New Jerseyans with a double whammy of annually decreasing entry-level job opportunities and annually increasing bills for state and local government. No matter how well-intentioned the wage hike is, it’s simply the wrong policy for the state to pursue.”

An analysis by New Jersey Policy Perspective and the Economic Policy Institute calculated that overall economic activity in the state would rise by $278 million in the first year after the wage hike is approved, while wages would increase by $489 million.

The increase would boost the paychecks of more than 500,000 residents without any significant adverse effect on business, the analysis said.

New Jersey’s last minimum wage increase, from $7.15 an hour to $7.25, occurred in 2010, when the federal rate also went up.

Nearly two thirds of New Jersey voters (65%) said they would vote to raise the state’s minimum wage in November, according to a September Monmouth University/Asbury Park Press Poll. Just 12% opposed the plan, with 22% undecided.